TJX Analysis

The TJX Companies Inc. (TJX)

Update 4/4/2017: TSX rose after earnings were published and then began tracing a sideways correction. A downward move within the zig-zag pattern combined with tine decay and lower implied volatility brought the position to my target price, which is 25% of maximum potential profit. I exited.

At exit shares were up 1.7% over 42 days, or a +14% annual rate. The options position produced a 33.3% yield on debit for a +290% annual rate.


 

TSX publishes earnings on Wednesday before the opening bell.

I shall use the APR series of options, which trades for the last time 59 days hence, on April 21.

Implied volatility stands at 23%, which is 1.9 times the VIX, a measure of the volatility of the S&P 500 index.

TJX’s IV stands in the 40th percentile of its annual range and the 51st percentile of its most recent broad movement.

The price used for analysis was $76.17.

Premium: $4.20 Expire OTM iron fly
TJX   Odds Delta
Calls
Long 82.50 87.6% 14
Break-even 79.20
Short 75.00 44.5% 59
Puts
Short 75.00 56.4% 40
Break-even 70.80
Long 67.50 89.5% 9

The premium is 57% of the width of the position’s wings.

The risk/reward ratio is 0.8:1.

Decision for My Account

I have entered a position on TJX as described above. The stock at the time of entry was priced at $76.25.

By Tim Bovee, Portland, Oregon, Feb. 21, 2017

4 thoughts on “TJX Analysis

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